Lapse Supported Life Insurance Policies

Definition of "Lapse supported life insurance policies"

Mike Karras
  William Raveis Real Estate

Policies that have their future cash values closely correlated with a high lapse ratio of the insurance company's book of business. In theory, gains resulting from these lapses will result in a greater surplus account, thereby building the future cash values of these policies. In essence, the policy is specifically designed so that if it is surrendered, its surrender value would be less than its asset share value.

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